Rise in City police in bid to stop fraud

The City of London's fraud squad is to increase its officers by a third. The move comes as it emerges that the Financial Services Authority is exploring the possibility of naming and shaming companies suspected of market abuse.

As part of the government's ongoing fraud review, City police investigators will be increased from 120 to 160 and there will be moves to centralise inquiries. In recent years there has been concern over stark regional variations in the numbers of officers attached to fraud divisions as economic crime in the UK escalates out of control.

The beefing up of City of London police investigators comes as it prepares to examine fraud associated with the London Olympic games. It will be looking for construction contract abuses and, in particular, counterfeiting of merchandise, which it believes is increasing.

Meanwhile, the FSA's intention to explore naming and shaming suspected market abusers will be seen as a significant development. It is considering doing so in cases where there are strong suspicions but insufficient evidence to prosecute. Last month, after a concerted campaign by rogue traders destabilised HBOS, shares fell by 18 per cent in a matter of hours. The FSA has been unable to get to grips with insider trading, which is rife in the City. It has not successfully prosecuted a single case of insider trading although the City's regulator has one case pending.

As the FSA seeks to stamp out market abuse a new survey shows a third of Europe's most powerful firms believe the authorities are unwilling to prosecute bribery cases. The 2008 European Corporate Integrity Survey of heads of legal and chief compliance officers published this week will show that half the surveyed companies based in the UK say the authorities are too reluctant to take legal action against suspected bribery.

Mark Pieth, the chairman of the OECD working group on bribery, said: 'The findings from this research are remarkable. Those surveyed are employed to protect their companies from prosecution; calling for more prosecutions is not in their self-interest. But companies' integrity has been called into question by the failure of authorities to properly investigate and prosecute instances of bribery. Nowhere is this more acute than in the UK where, despite high profile cases, no prosecution has been brought in the 10 years since the UK government adopted the OECD anti-bribery convention.'

Some 55 per cent are in favour of introducing a European version of the US federal sentencing guidelines, with financial punishment for breaches of ethics and compliance set at a very high level, but with significant discounts given to those companies that can demonstrate good corporate governance and effective ethics and compliance programmes.